Chipping Away - Busting Debt in Boston

A personal finance weblog about my own journey to eliminating my debts and building net worth. Hopefully this will serve as a place for me to share and discuss my strategies and ideas, as well as keeping me on track and focused.

8/24/2006

My Question of the Day!

Today's my day to post a question fo the day for the Question of the Day Marathon, and after a bit of a late start, and some thinking, here it is:

If tomorrow you were to suddenly find yourself unemployed, what would your action plan be and how much trouble do you feel you'd be in?

I'll publish my response after work today as a reply, so as not to influence anyone else's answers. Sorry I'm late on this, it's been pretty crazy at work!

posted by ChippingAway @ 11:07 AM  

31 Comments:

  • At 8/24/2006 11:59 AM, Blogger Kira said…

    Probably cry, and then start applying for jobs like mad. =) I would probably also call a temp agency and try to get a short-term job in between. I would also cut back to paying minimums on my debt and reduce unnecessary spending in order to conserve my emergency fund.

     

  • At 8/24/2006 12:00 PM, Blogger Chuck said…

    I think my immediate plan of action would be update the resume and start sending it out to everyone and their mom. Fortunatly I have an emergency fund for such an event, though I believe the recommended stockpile is 6 months salaray and mine is only about 4.

    While my skillset at my current job is pretty specialized and I doubt I could find a job in this area doing the same thing, I don't think I would be unemployed for longer than 4 months though I may have to take a lower salary. Plus assuming I get laid off I have 6 weeks of severance coming.

    It would certainly take a big hit on my savings in the short term, as I would not be putting away anything during that time. Overall though I hope I am prepared for such an event.

     

  • At 8/24/2006 12:05 PM, Blogger Amanda said…

    I don't think I would be in too much trouble, as I have an emergency fund and we could make cuts back to live on my husband's salary while I looked for a new job. Like Kira, I would most likely take some temporary employment to get me through.

    Amanda
    Young and Broke

     

  • At 8/24/2006 12:44 PM, Blogger Foobarista said…

    I'd start looking for a new job. Financially, it would delay our retirement, but we could live on my wife's income if need be (we currently save all of it). We also have about a year of expenses in our e-fund (in I-bonds).

    I've worked in startups for most of my career, so the idea of zero job security is not unknown.

     

  • At 8/24/2006 12:47 PM, Blogger Single Ma said…

    I would take a few days to deal with the reality of the situation and mope, cry, pray, drink, get depressed, sleep late, watch soaps all day, curse the situation, etc. (lol). Then when reality set in, I would:

    1) evaluate my expenses to see what/how much can be trimmed

    2) file for unemployment

    3) run the numbers to see how long e-fund could last (probably 6 months based on current expenses or 10 months if cut back to the bare minimum)

    4) polish the resume

    5) make some contact calls

    6) research opportunities for networking events and job fairs

    7) seriously consider starting my own business

    8) seriously put effort into finishing my book

    9) volunteer at my daughter's school more

    and finally...

    10) chill out and enjoy my time off

    I wouldn't take an "interim" job to make due because that takes away from the time spent looking for a real job. I would take my time to find a job, or new path to life, with comparable pay that I REALLY enjoy.

     

  • At 8/24/2006 12:48 PM, Anonymous Flexo said…

    I'd use it as a chance to take the next step in my career, being one week from finishing my master's degree. I have cash to hold me over for some time, and I still have minimal inflw from web projects if I lose my day job, but I'd want to find something right away.

     

  • At 8/24/2006 12:59 PM, Anonymous Tim said…

    Hmm...I'm an unemployed college student so it wouldn't be a big surprise. However, if I was working and lost my job I'd be ok because of my savings. I'd just go look for a new job.

     

  • At 8/24/2006 1:16 PM, Blogger D said…

    I wouldn't be to nervous, we have many multiple streams of income.

    I would first apply for unemployment - only because of the lag to receive it. I think this is 2 weeks.

    Then I would contact anyone and everyone I have done business with in the past. This would be me putting feelers out.

    I would also be updating my resume and recommendations through each and every step.

    My next step would be to register with a temp agency.

    Followed by registering at all online opportunity sites including monster.com & Illinois Unemployment Placement Services.

    Then I would buy a new interview suit (blue of course) and get out there.

    A downer like this is really just an opportunity waiting to be discovered. Attitude is everything!

     

  • At 8/24/2006 1:45 PM, Anonymous J.D. @ Get Rich Slowly said…

    If my job suddenly went away, there'd be bigger problems than just me! My family owns and operates a small business. We have ten employees (counting ourselves). I feel responsible for them.

    But pretending that it did, I wouldn't feel too bad.

    In fact, I've begun wondering what would happen if I just quite cold turkey. What if I saved up a little nest egg and quit? I've always wanted to write for a living, and this would force me to quit farting around and actually DO something. (I keep thinking of Ramit's "barriers" -- I have so many barriers it isn't funny.)

    My immediate plan of action would be to apply for some outrageous dream jobs -- just on the off chance I could get them -- and then to write like crazy, trying to make money at it.

     

  • At 8/24/2006 1:58 PM, Blogger udandi said…

    Having been laid off, I've already been down this path. Even though I only had myself to depend on I was okay financially, but it put a halt on saving and a run on my emergency fund.

    I filed for unemployment and temp work on the same day. From there I networked, volunteered, did freelance work, started my own business and nearly cracked under the pressure of people constantly asking me if I was trying to find a job and/or sending out resumes (um, no I thought the job fairy would land in my lap!) to the point that I became rather withdrawn.

    For me there was far more stress associated with the lack of new job prospects than there was with the lack of a steady income. It is certainly a character building experience but I don't wish that stress on anyone!

     

  • At 8/24/2006 4:31 PM, Blogger JLP said…

    I'm self-employed but if my wife got laid off it would hurt. We would be okay because I would just have to do more financial planning.

    Good question. It's good to have a plan for the "just-in-case" scenarios.

    JLP

    AllFinancialMatters

     

  • At 8/24/2006 4:38 PM, Blogger Shawn Abigail said…

    I keep a plan (in Powerpoint) that lists my assets and possible options in the even I am laid off. It includes steps to reduce my expenditures, people to contact for advice, various types of companies I could apply to, and even some "this is an opportunity in disguise" dream options. I do not list specific companies to apply to, because that changes frequently. I update my plan once every couple of months, as well as keeping my resume up-to-date.

    With more than 10 years at my current company, I would likely get a decent severance.

     

  • At 8/24/2006 4:43 PM, Anonymous Cindy said…

    Ditto what udandi posted!

    My first stop was the Unemployment line (no shame here - I've contributed my fair share, and then some).

    I've been without income for 3 of the past 4 years (some by choice). Fortunately, I have a large emergency fund (saw this day coming) so I have no financial stress. But, it has been super stressful coming to the realization that after a 4-year degree and 20 years of work experience, my profession is essentially going overseas or other parts of the country.

    On a positive note, all the free time to spend with family, volunteer to the "less fortunate", and start a new business has been worth it. Unemployment has given me a great opportunity to become more creative and explore facets of my personality that have been suppressed by working tons of hours in the corporate world. I like to think that I'm a more pleasant person to be around, and once my business gets up and running, I will be able to help other people improve their lives.

    As the trite, but true, sayings go, "everything happens for a reason" and "when life hands you a lemon, make lemonade."

    Lemonade, anyone?

     

  • At 8/24/2006 5:01 PM, Blogger Ms. MiniDucky said…

    Yikes, I would definitely be stressed out as I still haven't hit that *magic number* in the E-fund yet.
    I've begun keeping after myself with updating my resume, it's pretty up-to-date and I'm determined to stay flexible and responsive for just such an occurrence.

    First, I'd be upset.
    Second, I'd go into panic/super-plan mode and begin assessing where I am with all bills and financial obligations. Pay off expenses (ie: rent, utility, all cc bills, because I will not pay interest and don't depend on them anyway.)
    Third, start scouring the internet job search engines and posting my resume/applying to any and all jobs that are pertinent.
    Fourth, take a deep breath, and reassess if I really have to panic so much - I've gone a few months unemployed [planned] before and not really gone through much of the e-fund. I've no debt except what's already covered in savings.
    Fifth, continue job searching, rebating, Fatwalleting and seriously think about grad school.

    Maybe my answer will be different in a few months, I feel like I'm quite in a state of flux.

     

  • At 8/24/2006 5:09 PM, Blogger Amdollar said…

    Making sure we have an emergency fund fully funded is so important for catching things like this. Of course, income is very important and both my wife and I are not above doing retail, grocery, fast food whatever to pay the bills while we land hopefully a similar or better job.

     

  • At 8/24/2006 8:17 PM, Anonymous prlinkbiz said…

    I am always the odd ball out! lol I have been a stay at home mom for the last five years. But during that time I learned about business and investing. I built and sold a business. So when it was time for me to stand on my own (read here divorce), I built another business. I stashed money aside to invest in another biz to throw off passive income for me while I got my own business going. Now I have income from this investment as well as my own business clients, and other investments. Income should never be limted to a job and you should not have to rely on savings.

     

  • At 8/24/2006 8:35 PM, Anonymous ETF Guy said…

    I figure I could go for 6 months with no change in lifestyle and 12 months with some cut backs. And that would be just by dipping in to my emergency fund. Although employed by a large company, I also have some side income which would smooth things out.

    As for my plan, I'd probably reach out to my network of professionals and to recruiters to get the ball rolling. Nothing too unique about that approach I imagine.

     

  • At 8/24/2006 9:47 PM, Anonymous Ken said…

    I have had 6 jobs in my 11 year career. The first time I got laid off I got 6 months severance and had a got right away. So it was no big deal. The second time was a shock and I filed for unemployment, sat around at home and got a job 2 months later. The third time was a minor shock and I found a job within 2 months also. All this was during the dot com era where companies merged or went bust daily.

    After having been laid off so many times I realized that just going to get another job after losing a job is not the answer. You don't get ahead that way. You must create multiple streams of income. Passive income is the best. It's hard to create alot of it, but you must slowly build it. You need to become less and less dependent on your 9-5 job and more dependent on your investments. Why? Because you have control of your investments. You don't have any control of your job or your company.

    I decided to invest in real estate and build my passive income. I quit my job in 2004 and took off two years to sit around and do nothing. I just got a new job this past Monday because I was so bored sitting at home all day. I go to this job because I'm bored and I could use some spending money, not because I need it. It's a huge difference and mindset when I walk into work.

     

  • At 8/24/2006 10:24 PM, Blogger Brian said…

    I think I would feel free for a few hours, and then the reality of needing money for rent, food, electricity would set in. I would probably go ahead and find something temporary pretty quick, but would start to look for that more permanent position fairly soon.

     

  • At 8/24/2006 11:47 PM, Blogger mOOm said…

    This is highly unlikely to happen in practice as I'm a tenured professor... but if it did I might have to leave the US as I am still in the process of waiting to get my green card and the H1-B visa I am here with requires me to work for this employer or leave the country. After that, I would probably continue my trading which has recently been very successful and see how things go, network etc. I have several years worth of spending of non-retirement accouint savings even without making any money from trading.

     

  • At 8/25/2006 8:50 AM, Anonymous Kim L. said…

    First, I would absolutely freak out! House, 2 kids, make more than my husband, small eFund ... There would also be no severance since I work for a consulting company. I would probably be a mess for a few days. Once I got myself together, I would like to take it as an opportunity to figure out what I really want to do and go in that direction. I really do think it could be a "blessing in disguise" if it were to happen. It's definitely possible.

     

  • At 8/25/2006 8:27 PM, Blogger Penny Nickel said…

    I'd be alright; I have enough in savings to last me a good long time. I wouldn't *want* to burn through a lot of my savings, though. It'd probably actually push me towards moving to the Washington DC area, a move I've been wanting to make. It wouldn't make much sense to do a job-hunt here in Chicago and then move in a relatively short time. My parents live in the DC area, so I'd probably move in with them for a bit post-move if I couldn't find a job.

    I'd also like to say that I'd use my unemployed free time to work on writing fiction-- I hope I would-- although I have a suspicion things'd be stressful enough that it wouldn't be too productive.

     

  • At 8/26/2006 4:08 PM, Anonymous Sally Parrott Ashbrook said…

    1. In all honesty, first I would cry. Probably out of sadness, but I do this automatically with a scare or shock.

    2. I would apply for unemployment.

    3. I would start applying for jobs, but probably only ones that really interested me. Not wanting to trap myself in a new job I would hate long-term, I would probably do temp or freelance work.

    3. Most likely, my husband would take leave from school. (He's getting a Ph.D. in computer science.) He could get a job making 1.5 times our current combined income pretty easily; he gets people calling or emailing about whether he'd be interested in leaving for a job regularly. However, we both want him to be able to finish his Ph.D., so . . .

    4. We'd cut our spending so that we could save more money while he was working. We'd stop throwing money at cutting our debt for a little while. When I got a job again, we'd use the savings from his employment to cushion ourselves better from future incidents and pay off some of our debt.

    This is definitely an easier scenario to consider now that I have Dan in the picture!

     

  • At 9/04/2006 1:07 AM, Anonymous mbhunter said…

    Great question. Sometimes I think it would be a mixed blessing if I found myself out of work. It wouldn't be pleasant at the beginning but I think we'd survive and eventually surpass what we're doing now. Just without a job safety net at first.

    We could last a while -- we have about 6 months' socked away. We also have capital equipment for businesses that we could kick into high gear if needed.

    I'd hit those businesses hard and blog like crazy, put up satellite sites, etc.

     

  • At 9/06/2006 6:58 AM, Blogger Matt said…

    Well, the first thing I _wouldn't_ do is panic. Trust me...I've done the panic thing, and it doesn't help at all. Indeed, it can be self-reinforcing.

    As for what I _would_ do...well, I'd set the paperwork in motion to start paying myself out of my business funds, and then I'd get out and hit the networking trail. (At this point, I could live entirely off income from the business, if I were willing to pay US taxes on it...and even if every single client cancelled, I could draw down the money the business has in the bank -- at a depletion rate sufficient to completely replace my current salary -- for just under 6 years before the money ran out. It strikes me as insanely unlikely that I'd be completely without income for longer than that. My longest period of unemployment since I was 14 years old was a combined 18 months over 3 years...and it sucked, but I managed to get through it and back out the other side again.)

     

  • At 9/22/2006 9:35 PM, Anonymous Anonymous said…

    I would immediately start the process of buying a franchise business. Our emergency fund and investments would easily cover us until the business is self-sufficient.

     

  • At 9/26/2006 7:59 PM, Blogger Lazy Man and Money said…

    This actually happened to me when the dot-coms stopped doing well. I'm a pretty skilled working, so I was able to get some contract jobs for a week here or a month there, using unemployment to fill in for the weeks that were slow.

    Today, we have two incomes and if necessary, we could get by on one. My significant other's is a military position of which no one has ever been downsized due to economics - and I guess only a handful have ever been fired.

     

  • At 10/08/2007 9:36 PM, Anonymous pharmboy said…

    we'd move back to my wife's home state where my occupation is in higher demand...we'd be lucky too, cuz we're piling up money for a house, we could cash flow for 7 months, at least.

     

  • At 4/14/2008 4:40 PM, Blogger Lisa said…

    I would clean out my work area, give everyone a hug goodbuy, Check on my severence package, and look for a new job. I have a decent emergency fund and no BIG bills. I would be alright for at least 2 months.

    Several years ago, I could not say that. I would really be stressing!

     

  • At 4/16/2008 3:16 PM, Anonymous pension said…

    I would definitely try and get a temporary job so I didn't have to dip into my savings - then try and find something with a long term prospects!

     

  • At 5/23/2008 2:58 PM, Blogger Pushing30 said…

    Wow. Talk about hitting home with this question. This did happen to me last year and I went through the following: panic, anger, uncontrollable crying! Then because I had no savings, I started using credit to get by. I asked my part-time employer to bump me up to full-time which helped cover the day to day expenses. Oh and I went resume crazy. Luckily, the job offers started coming in and I was employed after a month and a half.

    What did I learn? Plan for the unexpected. I was lucky to have a line of credit to get me through this time, but now I've started setting goals for fluid, cashable emergency funds.

    I also think it's important to keep your networks active. Having great references really helped in my job search.

     

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